Hurricane Data Validates Resilient Building Standard

Pete [00:38]: Welcome to the podcast!  Today, we’re joined by Dr. Lars Powell, Director of the Center for Risk and Insurance Research at the University of Alabama. The Center’s groundbreaking work is transforming how we think about resilient homes. Dr. Powell has spent over a decade researching how building standards like IBHS’s FORTIFIED program not only increase home values but also perform during real disasters.

In our conversation, Lars shares fascinating insights from his recent study on Hurricane Sally claims, which provides the first public, large-scale evidence that FORTIFIED homes withstand major storms significantly better than conventional construction.  We’ll also explore Alabama’s remarkable success story, where their innovative grant program has led to over 53,000 FORTIFIED designations—roughly 75% of all such designations nationwide.

If you’re interested in how better building practices can protect communities and reduce insurance losses, you won’t want to miss our discussion.

Pete [01:51]: Thanks for joining us, Lars. So our show focuses on how the best loss is the one that never happens, and your research provides data that kind of backs this up. So, before we dive in, can you tell our audience about the Center for Risk and Insurance Research and its mission?

Lars Powell [02:08]: Pete, thanks for having me on. It’s great to be here and great to share some news about the work we’ve been doing around resilience. So the Center for Risk and Insurance Research solves problems with research, education, and outreach. And most of that is around insurance, or we thought it would be. It turns out our biggest insurance problem isn’t so much an insurance problem as a how we build houses problem or a loss mitigation problem. So we’ve had an opportunity to learn some new things, but I think we’re catching up with where these things are and so the science is coming up with the answers. That’s why we’re here.

Pete [02:44]: Lars, you and I have talked before and I remember that previously the Center conducted research that showed homes that were built with IBHS’s FORTIFIED standard have a higher resale value. So can you talk a little bit about that and the importance of that research?

Lars Powell [02:58]: Sure, that was our first foray into this, trying to put some numbers around FORTIFIED. And we found that they sell for more, on average it was 7% more, than conventional houses. And that differed based on how close you were to the water. So if you’re right on the beach, then it might be 15, 17% more. If you’re a little further away, it might be a little bit less, but 7% on average. And what was encouraging about that is that is, if you could back into the number really easily. So if you were to amortize the insurance savings that are required in Alabama over a 30-year mortgage, it came out to be about 7% in present value of that home’s value. And so it makes a lot of sense. It gave us more confidence in the number instead of just being something that gets spit out by a model. And even more exciting is when people start to behave as if they understand what’s going on, that they’re showing some, we don’t like to it rational behavior, I guess that’s out of style now, but that you can make some sense out of what people are doing, because that’s not always the case around resilience.

Pete [04:07]: You published some new research in May that seems to go beyond demonstrating that a resilient home is more valuable and also shows how FORTIFIED homes actually performed in a real hurricane, Hurricane Sally, I believe. So can you tell us about that study and some of your key findings and sort of how did they compare to what you expected going in?

Lars Powell [04:29]: Well, we never know quite what to expect when we get new data, but this was, this is the sort of thing that we think about in grad school as a really kind of best case scenario for research. And we try not to get excited when there’s a storm because that’s always bad, but as researchers, it’s kind of like working at the Weather Channel. Your job gets exciting when there’s some sort of really bad weather. So we don’t ever pray for that. We don’t ever wish it on anyone, but when it happens, especially when you have the leadership like we have in Alabama in the insurance commissioner’s office to recognize this as an event, that gives us new information.

It’s not the first ever study on how FORTIFIED performs in a hurricane. It’s the first ever study that we’ve been able to, that anyone’s been able to make public. So there’s some that you have to try really hard if you want to read them, but there’s some things people know, but they’ve hit it’s been much weaker storms and much smaller numbers of FORTIFIED homes. And honestly, I don’t know what they found because I haven’t been able to read them yet.

But anyways, this is what we’re calling the first test of the performance of FORTIFIED on a critical mass of houses. So we had 17,000 FORTIFIED houses in Alabama, almost all of which were in the hurricane zone, our two coastal counties Mobile and Baldwin. And that was during Hurricane Sally. It was a strong Category 2 hurricane. So winds, there were gusts up to about 125 miles per hour, which is just enough to start doing structural damage. So it’s when you, when you break over that 125 mile per hour limit that you start seeing the difference between, gold and bronze or gold and roof in terms of the FORTIFIED designations.

So what we expected to find, I mean, we sort of assumed just based on the science, based on the engineering, based on the laboratory tests that these FORTIFIED houses would perform a lot better than conventional houses. We didn’t know how much better because it’s real life and there’s stuff other than wind and rain that can damage a house. And that was one of the things that we learned was about trees. And when a tree falls on your house, there’s not much you can do about it. Your best bet is to cut that tree down in advance. But I think 46% of the claims from Hurricane Sally, at least in our sample, were from trees falling on houses.

But so what did we expect to find? We expected they’d do substantially better, again, based on the science, based on how you keep water out of a house when it loses its seal, or when it loses its rooftop, then, and it certainly did that. And we’re learning more. We’ve got a lot more data analysis to do, but we decided that we knew enough about the insurance claims to make this public because there are still a number of people, number of entities that say, hey, we don’t, we don’t doubt the science. We don’t doubt what happens in the laboratory, but we don’t trust it enough to make that part of our rating structure, make that part of our underwriting plans. And so then you see companies that could now in hindsight be writing these and that they could do so now. And this gives them an opportunity to understand that and feel more comfortable.

Pete [08:01]: So you mentioned about trees. Were there other things that came out of that study that surprised you?

Lars Powell [08:07]: The two big surprises, one was trees and I’m not sure why that was a surprise. We all know that trees fall down when there’s a storm, but the volume of trees falling down when there’s a storm was a surprise to me, as well as the amount of damage being kind of middle of the road in terms of how much it costs. I think the average tree fall claim was around $20,000, which that’s not chicken change, but it’s that’s plenty of money to have to spend to repair your house, but it’s not like having the whole roof come off and have everything in your house damaged.

The other thing that was a big surprise was the difference between FORTIFIED designations and houses built to an identical building code. Once we control for all the other things we can control for the location of the house, whether or not a tree fell on it. Location being the biggest thing because the FORTIFIED houses, you’re more likely to have a FORTIFIED gold house the closer you are to the coast. That makes a lot of intuitive sense because that’s where it’s the most valuable. And it’s also where people pay the most for their houses. So indeed you find that. And the average gold FORTIFIED house was two and a half to three miles closer to the coast than the average FORTIFIED roof or bronze house.

And there was also some differences between the code and the FORTIFIED designation. We’ve got the different municipalities across Mobile and Baldwin counties have building codes that are based on the FORTIFIED system. But it’s very hard to enforce that building code with the traditional kind of cadence and frequency of building code inspections.

What we found was that the FORTIFIED gold and the houses built to the gold standard without getting a designation, their performance was nearly identical. But FORTIFIED roof, which is when you have fewer code inspection visits based on re-roofing a house versus building a new house, they weren’t anywhere close. If you look in the paper, we’ve got some figures that show this, but comparing what we call the code roof to the FORTIFIED roof houses, there was a huge difference. was more than, it, didn’t even split the difference. It was closer to being a conventional house than a FORTIFIED roof house. Even after we control for where it is, how fast the wind was blowing in that specific location and whether or not a tree fell in the house.

There’s still this big difference, which is something that we talk about in insurance all the time, right? Because we know that some places in enforced code better than others. And I don’t want to disparage any of the code enforcement people in Alabama and our two coastal counties because my understanding is they are a lot better than most anywhere else, especially in the Southeast. I know several of these people that do code inspections that lead code inspection teams. And I’m kind of surprised to learn that there was this big of a difference. And so we’ve got a few more layers to peel back.

We need to do a little bit more to determine if there’s like a timing thing, if it was the first few years they had the code in place that they were learning how to do it better, or if there’s certain places or certain code inspection personnel that do a better job than others. But what’s really neat is we’ve got all this data and we can do it. for a researcher who’s all into data, this is a great opportunity for us.

Pete [11”52]: We’ll certainly look forward to that. So how has your summary, your results of the new study, how has that been received?

Lars Powell [12:04]: It’s been resoundingly positive. Now that there was, at one point I was talking about cutting down the trees around your house to the environmental and forestry commission and that they were, you got to know your audience in these things because I was not getting the typical response of, oh, that’s great news. Hey, why are you going to cut down all the trees and then you don’t have any shade on your house. And so you run the air. There’s always trade-offs in these things.

But by and large, it’s been received very well. I was looking at my travel schedule for the next six months, and I don’t think there’s two weeks in a row that I’m not going somewhere to talk about what we found and share these results with different individual companies and trade groups. And then also all the there’s sort of a circuit around resilience where there’s a number of conferences every year.

And everyone wants to hear about, especially some people want to ask questions, other people just want to get a copy. And of course, we encourage everyone to go to ALDOI.gov [https://aldoi.gov/PDF/News/PerformanceIBHSFortifiedHomeConstructionHurricaneSally.pdf]  and download their own copy of the report, not only because we’re counting the number of times it gets downloaded, but because we want you to have it and have the information. So, no, it’s been received very well.

What we haven’t seen yet, we haven’t seen any of the larger carriers that don’t write at the coast say, OK, we’ll do it now, but then we’re not done yet. This just was released a few weeks ago and there probably hasn’t been time for people to make new rate filings for company to make new rate filings, but we’re hopeful that it at least gets insurers to think about whether or they can write these without them going into a wind pool. Once it goes into a wind pool, it’s kind of a black hole and it’s we wish we didn’t have to do that. Residual markets are there because there’s not a voluntary market. And once you’ve built a house that’s going to stand up, if you’ve got a FORTIFIED gold house, your chances of having a loss in a hurricane are pretty small. mean, having a loss, given that a hurricane is happening, your chances are pretty small. If you have a FORTIFIED gold home and a tree didn’t fall in your house, you didn’t have a claim in Hurricane Sally or there were very, very few.

And there were a few that were curious, shall we say, where we kind of drilled down into who built that and who owns that and are we sure it was FORTIFIED? And turns out something that were listed as FORTIFIED weren’t. So it’s something that I was actually pretty surprised by in the data. So it was a data call that the Department of Insurance put out and the insurance companies responded to it. And I think we had 86 companies respond to the data call. And that means we had 86 different formats the data were in. So it took a while to clean it. But there were thousands of houses that were underwritten in price as if they were FORTIFIED, but they weren’t. And there were at least hundreds that were FORTIFIED, but weren’t getting that FORTIFIED discount because the insurance company didn’t know that they were FORTIFIED.

Pete [15:12]: So let’s just talk about that because you have now two data points, right, where you can say FORTIFIED buildings add to the value of the home and are more likely to have less severe damage in a hurricane. Do you expect to encourage wider adoption by homeowners and or ensures providing it as a benefit to policyholders?

Lars Powell [15:36]: So Alabama has what we call benchmark discounts. And what that means is that we go through an actuarial study. And that’s what we suggest or what the Department of Insurance suggests for insurance companies to use unless they can prove that they’ve got some different exposure. So you always have that opportunity to say, this doesn’t work for our book of business. So having the benchmark discounts, make sure everybody gets something that can possibly, if they go in the market and shop, they’re going to find somewhere they can get this discount.

But the other states, so Mississippi has a requirement that insurance companies offer a discount that is supported with actuarial estimates. And we see discounts that are pretty similar to what we see in Alabama. Some companies offer a smaller discount. The real question is, I’m much less concerned about how much the discount is as I am what the premium is. Because you’ve already got differences across companies and what they charge and that’s based on their marketing plans, their underwriting plans. And so if they’re already underwriting and marketing towards houses that are stronger, then their discount maybe doesn’t need to be as much.

What I’d like to see is, it’s probably the case that you could be with one company and be getting a discount, switch to a different company and pay less, but not be getting a discount, just based on differences in the market. So yeah, we think that these things will happen naturally just the same way they do with fire protection zones and everything else, distance to fire hydrants and all the other elements that insurance companies use to policies.

Having this in Alabama does seem to have gotten more consumers interested in it. There was a lot of skepticism early on in the program where people were upset that their insurance price and insurance costs went up after Hurricane Ivan, Hurricane Katrina. And we said, well, we need to build better houses. And they said, well, you’re blaming the victim here. We just want our insurance to be less expensive. And the old saying is you can have, there’s insurance that’s affordable, insurance that’s high quality and insurance that’s available and you can choose two.

that you’re never going to get all three in the same place because they’re mutually exclusive. Now, if you build better houses, that gets flipped, right? If you get rid of the losses, then you can provide insurance the same way you do everywhere else. And that’s the case, whether it’s hurricanes. I mean, it’s different when you’re talking about a hurricane versus tornado or high wind and hail or wildfire or earthquake, but each one of those has the loss mitigation features you can put in place. that I don’t have to, I’m fishing the choir with you Pete, but it’s odd that what we see in public policy is that this problem of storms and fires and earthquakes manifests itself in your insurance price, but the insurance market is really doing exactly what it’s supposed to.

There are some times, and this is where we like to get involved, where we can help bring some information to make it easier for insurance companies to take in the new kind facts on the ground, how did this perform? And of course, there’s a lot of other folks that do that and they pay them a bunch of money, at bare risk, and the other companies that have all this information that insurance companies buy. So I’m not saying it’s just universities. But it’s a lot of fun to be participating in something and have it seem to matter to people. That’s not always the case in academia.

Pete [19:34]: I think it definitely does matter to people. But when you’re out talking to people, and there’s, know, like maybe for even wider adoption of resilience and risk mitigation. So what do you see as the objections? Is it people that go, I don’t want to spend money to take my trees down, or doesn’t look nice, or are contractors kind of willing to follow a new, like a FORTIFIED standard, or is it something else large?

Lars Powell [20:00]: It’s all of that. Anyone that’s shopped for houses knows that there’s a lot of things that you can look at. And even within the same family, there might be different individuals who like different things about a house. early on speaking to the contractors in Alabama, which we recognized almost immediately, if they weren’t involved in any sort of resilience plan, that it was never going to work.

And first they’re like, well, the only thing that homeowners care about are granite countertops and maybe a nice-looking front door or whatever it is, whatever it is that week. Then over time, we started, I started working on this all over 10 years ago and over time it’s become a real selling point for the home builders in Alabama. And we had a new data element, a new placeholder put into the MLS for FORTIFIED so that that goes out to all the appraisers and to all the real estate agents so they can know it. And really, if you get on Zillow and search towards the coast of Alabama for FORTIFIED, you’ll see hundreds of listings come up that if it’s a FORTIFIED house, they make sure that you know it.

So I’ve said kind of tongue in cheek, but not really, that one of the most important things about whether you like your house is whether or not you think it’s better than your neighbor’s house. And the hard thing about being FORTIFIED is that that doesn’t show on the outside. I’ve been encouraging IBHS to develop a fire mark. I know that the Institute has a great collection of fire marks, of which I’m very jealous, because I’m enough of an insurance nerd to think those are really cool. But just something you put on the outside of your house so that people know what’s good about the inside. To show that, hey, this house is FORTIFIED and the next time a storm comes through, our soffit’s not going to rip off and go through your window. That makes us a good neighbor. But if you don’t have any way to demonstrate that, if you can’t make your neighbors jealous, then they can’t copy you with a FORTIFIED house. So I’d really like to see that be something that shows up more on the outside of a house. It’s obviously, you make up something like that, next thing that there’ll be counterfeits or whatever.

Wouldn’t that be great if people liked the FORTIFIED mark enough to counterfeit it? mean, that would, it’s the same thing with anything that’s expensive, people try to make, or anything that’s valuable, people try to make fake ones, but that would just be flattering, I think.

Pete [22:34]: It sure would! As you mentioned, you’ve been working on this for 10 years and I know having known you for a while, you’ve done a great job of sort of talking about the benefits and it’s been done pretty well in Alabama, right? And you mentioned Mississippi and other states. So when you think about it expanding to other states, Alabama has been pretty successful in your efforts and others but.

Can you tell us, what were the keys to Alabama’s success and what should other states think about emulating?

Lars Powell [23:07]: Well, there’s a handful of things that are really hard to emulate. We had amazing leadership in Montgomery and that started with Jim Ridling, who was commissioner and Charles Angel, who was the chief actuary. And commissioner Ridling really had a vision for this. Of course, commissioner Mark Fowler has carried on that vision and in some ways really improved on it and was of course involved the whole time throughout commissioner Ridling’s tenure, but it started with a trust between the regulators and the industry that the regulators weren’t looking to penalize anyone. Commissioner Ridling had been a very successful insurance company CEO and had retired from that before he got into public service.

You can look around and see the way that other states have tried to fix these problems, which I’ve already told you are not insurance problems, they’re how and where we build our houses problems. They’ve tried to fix them by saying, let’s don’t raise rates because people can’t afford it. Well, what you really can’t afford is to have the insurance industry vacate your state or vacate your high-risk areas. And it’s a very short sighted thing. I’m not really disparaging someone because they got hired for a job where they have to reapply for it every four years. And four years is a very short time. And of course you start, you start campaigning for it much earlier than, than re-election time. And so it’s all about what have you done for me lately. And the thing we look back on now in Alabama, while we’ve got more than 50,000, think coming up on 53,000 FORTIFIED designations,

Just in Alabama, in a place where I think there’s 210,000 or 220,000 houses total in our two coastal counties, the single-family houses, a large portion of them are now FORTIFIED. To look at the issue, if we had started building this way in the 60s or in the 80s, instead of in the 2010s, then the hurricanes we’ve had since then would have been much different stories and today we’d have 100 % coverage of these four to five designations. You think about the speed at which housing turns over, it’s not fast. It might be two, maybe two and a half percent per year in terms of when houses are built around 25 to 40 years. see new, I’m not saying when a roof wears out, but when you see people actually replace them because those can be two different things. You see roofs getting replaced on those intervals. And so what you would expect is about two to two and a half percent of houses naturally being re-roofed in any given year. So if you start today, you’re looking at quite a while before, maybe 40 years before you see kind of complete turnover in your housing stock. But if you don’t ever start, then you don’t ever get there.

And if you have something like the strength Alabama homes grant program where the state and this is run through the department of insurance, they’ve given away in grants. believe it’s $86 million now to retrofit a little over 8,700 houses. Some of them don’t require the full $10,000 grant that’s available.

And of course, that’s out of 52, 53,000 FORTIFIED houses. So what that does, having the grant system was a signal to contractors, this is something worth learning. There’s going to be business to do here. And every application, we’ve got the data on this, and this is really interesting. This is something we’re going to try to have ready for publication in short order. But what we found is that looking at the data from the grant program,

Each applicant has to get three bids, has to get bids from three contractors. And then they can choose whichever one they want, but they don’t get more than the amount of the lowest bid, or they don’t get more than the $10,000 that’s allocated. And most of time, a roof is going to cost more than that, especially if it’s, a FORTIFIED roof doesn’t cost that much more than a roof, but a roof costs a good bit relative to the value of a home. So it’s not a small purchase and having the extra $10,000 to do that gets people to do it before it’s an absolute necessity and helps increase that. But more than that, it got the contractors to learn how to do the FORTIFIED roof. And once you’ve got the supply of contractors to provide the FORTIFIED roof, then they sell it outside of the grant program too. So we see these same contractors show up in the permit databases building FORTIFIED roofs and FORTIFIED houses and the more contractors that bid on one or more strength in Alabama homes grant projects, the more FORTIFIED houses we find outside of the grant program. And that’s important to all the other states. I think there’s 29 states right now that are considering something like Strengthen Alabama homes, which that’s, it’s flattering. I don’t know if we got lucky and found a way that kind of works or if there’s a better way to do it if we were very thoughtful along the way and did everything right. I’m not trying to take any credit for that. think Brian Powell and the Department of Insurance did a great job bringing that along. Now it’s Travis Taylor running that program. But for whatever reason, we’ve been able to get 50 something thousand when the entire country has around 70,000. So that’s most of them are in Alabama and we feel pretty strongly that this grant program helped.

Now the grant program is, there’s a lot of things about it that are important. Number one, it’s funded in dollars that would become tax revenue if we didn’t spend them on this. So we can’t say it’s completely uninvolved with taxpayers, but the way we the way we funded it was for the insurance agents and licensing fee the commissioner went to the industry and said we need money to start retrofitting houses and We haven’t changed the licensing fee in a long time. It was one of the lowest in the country. So they doubled it. I think it went from $30 a year to $60 a year and one half of that money goes into the funding of Strengthen Alabama Homes. And I’m very thankful that a tiny bit of it goes to fund our Center at the University of Alabama, so we can help share the good news about it. We thank every agent that every time they renew their license, every company that renews its license in Alabama, that’s where the funding comes from. So it wasn’t like we had to get the legislature to through ways and means to allocate a big pot of money, we were able to create the money in partnership with the industry. And honestly, not everybody loved that idea, they realized the importance of having something like this. And again, it’s one of the reasons why I’m always proud to be part of the insurance industry. I feel like a lot of the companies do what’s the right thing to do for the right reasons.

Pete [30:45]: So it sounds like I heard you say, Lars, really there was a grant program and it was funded not through the general fund, but it was funded by fees on agents. So it’s a separate funding mechanism. There were standards, right? There’s known standards. And folks got discounts. And those are pretty, pretty key things. Lars, let’s look beyond FORTIFIED. When you think about, are there risks mitigation member or measures that you’re looking at and that you think about that show promise, different types.

Lars Powell [31:23]: You know that they’re different for every, for every peril for each peril. You’ve got things very similar to the FORTIFIED, hurricane program for high wind and hail. Many of the same features go into the two programs. The thing that I think is probably the most exciting where the research frontier is right now. And, what we’re seeing a lot of.

There’s always been some risk, but where we’re seeing a lot of risk that was formerly unknown is in wildfire and these wildlife urban interface, the WUI area. And so what do you do with that? There’s a lot of promise there, but it’s going to rely on technology that’s substantially different.

For FORTIFIED, you build it that way. For FORTIFIED hurricane, you build it that way. And it’d be really hard to undo. You can’t climb up in your attic. I guess you could climb up in your attic and pull off the hurricane clips. I don’t see anybody pulling out the ring shank nails and putting in smooth nails on purpose. But for the wildfire, you have to have separation between your house and things that burn. And it’s really convenient to have a stack of firewood next to your house when it’s cold outside. And so you tell the insurance company, look, I’ve got my defensible space, however many feet, 10 feet around my house. And then three weeks from Thursday, you have a load of firewood brought in and they ask where you want them to stack it. You know, just put it right over there by the stairs on the back porch, because that’s the most convenient place. And now you’re out of compliance with it. How does the insurance company know? How does he want so that there’s

There’s really interesting ways that I’m sure you’re familiar with around the industry of following up on these things. There’s been a lot of technological progress with drones and the flyover aerial imagery and stuff like that, that you could use an AI model to identify houses that might be out of compliance. But it’s gonna take something like that  for the individual houses. Now, the thing that I’m also excited about is one of the best fire breaks you can use is a golf course. And so I’m going to put out here a challenge to the different mayors and county councils of anywhere that I’m going to visit in the near term to make a municipal golf course around any place that’s really got a wildfire exposure and that would maybe drive prices down a little bit and make it easier for those of us who golf on a budget.

Pete [33:48]: I like that. That would just be more golf courses. I could just prove how poor I am at golf. Lars, I’ve always thought of you and many do as a leader, a thought leader in research and certainly you have many impressive publications. So what about you, Lars? What are you interested in next?

Lars Powell [34:07]: Yeah, I wish that question was easier to answer because then I would be off doing it instead of sitting around telling people about it. But really what we’re doing today is something that I’m learning how important it is. It’s something where when I’m evaluated on how well I’ve done my job, it’s how well have we shared what we’ve done in addition to what have we done and how good is it?

I’ve been on a number of panels and podcasts and had opportunities to talk about this research and I’ve really enjoyed it and I really appreciate you having me on today to talk about it too. We’ve got probably two dozen more things we could do with just the data from Hurricane Sally. We’ve got a couple of new projects where we’re looking at

How should the CBO score things like a disaster savings account? what would that do to the, obviously there’s a much different sort of set of focuses in Washington DC right now around how

dollars are going to be spent for resilience, mitigation and disaster recovery. I think there was announcement today that FEMA was getting pushed more towards the states once hurricane season is over. We’ll see how long that is the goal or the objective.

But whatever the reason, if the government doesn’t want to spend money on resilience, then it’s really important or if the government’s going to going to evaluate every dollar that’s spent on resilience and loss mitigation, then we need a good way to show them what those costs are and also what the benefits are. And one of the things that we don’t have a good idea of, there’s been a few papers recently published in journals and I wish they got more attention than they do, but showing how much faster a community recovers after say a flood or a hurricane, based on what percentage of the population has insurance. And then doing the same thing with FORTIFIED roofs and FORTIFIED Firewise or whatever it is, helping to understand how money flows through an economy relative to a natural disaster or any sort of disaster. What do things actually cost and how much money is actually saved when these losses are prevented. And it’s a really hard thing to know.

So it’s going to involve a lot of discussions, trying to get information from private companies or public companies, companies that don’t have a requirement to share their information with you. We don’t really know. I heard during COVID that the Mercedes plant here in Tuscaloosa would lose $1 million per day in profit for every day they were not running. So if it was shut down for supply chain reasons, that’s a million dollars a day. But of course, that’s not the only employer in the world. So trying to take all that together and figure out where could you, if you’re going to spend some number of dollars on resilience and on loss mitigation, where’s the very best place to spend it? One thing that we’ve seen from different projects, We did a project after Hurricane Harvey, where went down to the coast of Texas and to Houston and talked with businesses about this. there were businesses that, there was an exterminator we talked to, whose business, they didn’t have a single property loss, but a lot of what they did was go to people’s vacation homes and spray for bugs, even during the off season. And the last thing you’re thinking about is getting your grass cut, getting an exterminator to spray for bugs, having your house cleaned if it’s been knocked down. So there’s all these ripple effects through the economy.

And there’s also different ways of thinking about how we assist people in loss mitigation. So some people need more help than others, maybe some sort of means testing. But the other side of that is if you can offer a smaller incentive, I’m sure we can give away as many $5,000 grants, well, we could give twice as many $5,000 grants as could, $10,000 grants for strengthening Alabama homes, we’d be serving a slightly different population of people that can afford the other $5,000, but all those roofs would be getting retrofit. And so that’s going to preserve some amount of economic opportunity for maybe lower income groups. It’s not what I think is more important or what Pete Miller thinks is more important. It’s what makes the economy run best. What keeps the most people paying their bills and feeding their families and rowing in the same direction as the economy. And I feel like that’s the goal. And we don’t know what that is until we bear down on how all that money and activity moves through an economy.

So yeah, I think there’s a lot to that. There’s going to be, we’ve got some projects that start getting into that coming up. But obviously we haven’t written down exactly how we’re to do it. But I’m not aware of a lot of other people who are going through that process either because it’s not for the faint of nerve that there’s a lot of details that go into it and trying to separate the fact from other thoughts is hard.

Pete [39:53]: Lars, thank you very much

Lars Powell [39:55]: This was great. I appreciate the opportunity.